Affordable Luxury Brands On The Rise in China

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It may take some getting used to, but Chinas luxury market is making its way into affordable luxury items. This trend to meet the needs of the growing middle, and upper middle class consumers and is creating opportunities larger number of brands, domestic and foreign.

We are working with a womens fashion accessory company to launch a product line this year and the early research shows some surprising aspects of the affordable luxury brand purchasing among Chinas consumers. The Chinese buy brands for similar reasons as consumers from other economies, however, there is a sense of a dynamic in this market, compared to the same group of luxury brand consumers in other markets.

My analysis of Chinas increasing aspirational consumer is setting up a niche market that is under the top price points, but significantly above the price of average products. This is driven by the rise in income and employment status of Chinas growing middle class who want to buy quality, to convey an appearance of luxury, and who desire to portray being a global citizen by purchasing international products. In some cases, this category of consumer wants to blaze a new path by purchasing non-traditional, high quality products which is creating opportunities for small and midsize foreign companies to jump into China.

This is my other car

Need proof? Get this, Lamborghini contemplates a new everyday model. CEO Stephan Winkelmann, told the Reuters Global Luxury and Fashion Summit that increased sales in China are tempting the high-end auto designer to consider an everyday model for its current product line.

A key indicator in any market is to follow the money. China luxury brand categories are no exception to this rule. The line up for Initial Public Offerings and listings on the Hong Kong stock market would delight the most vigorous name dropper, Prada, Coach, LOcctaine among others. Luxury China jeweler Chow Tai Fook is creating a buzz as its IPO is on the ears and lips of investors.

Our suggestions to those considering an entry into Chinas hot fashion industry:

Personnel must be here on the ground, China is not a handle remotely market

Test pricing strategy as the Affordable luxury market is new for all parties, consumer, distributor, and manufacturer alike

Public Relations in country can help build brand and create excitement around product launch

Distribution options while slim a couple of years ago are changing rapidly, be flexible even if you are committed to building your own storefronts.

If you have questions or are a member of the media, contact me at mzakkour AT tompkinsinc DOT com